Wall Street’s $4.9 Trillion Model Boom Gets Slammed in Study (1)

A booming $4.9 trillion branch of the U.S. asset management industry is funneling investor cash into funds that are pricier and worse-performing than alternatives, new research claims.

So-called model portfolios -- off-the-shelf investment strategies often comprising bundles of ETFs -- are ridden with conflicts of interest that undermine one of the hottest and most opaque businesses on Wall Street, a trio of academics argues.

These allocation blueprints, usually created by asset managers and deployed by financial advisers, have exploded in popularity in recent years as easy, one-stop solutions for investors of all stripes.

Yet the firms designing them tend ...